September employment figures were lower than expected at 194,000, but it was a messy report with large revisions from previous months and a sharp drop in the âhouseholdâ unemployment rate to 4.8% . The market had a minor reaction to the news, but interest rates continue to rise, so there are still concerns about inflation despite the bad news on jobs.
Bonds have been under pressure since the September 22 peak, and there is growing talk of the danger of stagnation which is the combination of higher inflation and slower growth. Despite this obvious bearish problem, stocks did not care too much about the problem. The bearish narrative has always been that higher rates and a less friendly Fed would be what would ultimately end this long-standing bull market, but so far the market is doing pretty well.
The big question at this point is whether the lows reached Wednesday morning before a debt ceiling deal was struck will serve as short-term support as we enter earnings season. The indices are well above this level and hold on fairly well to subsequent gains. Today we are seeing some consolidation and some grassroots action as we digest the earnings reports. The bond movement is worrying, but so far it has not had a significant impact on the market.
A little bit of support and infill at this point would be healthy, and as long as there isn’t a retest of the lows, then we’ve got a pretty good setup. It is important to distinguish between the chart patterns of indices which have undergone relatively small corrections from many individual stocks which are already at substantial support levels.
I did some shopping today, but still have very high cash flow. I expect to be able to roll out some of it next week as charts develop ahead of earnings. Today I added IonQ (IONQ), Beyond Air (XAIR), Aehr Test Systems (AEHR), Hut 8 Mining (HUT), LendingClub (LC), The Beauty Co (SKIN), and a few other names , but I hope to be much more aggressive next week.
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